The Situation in the Ukraine. #13

War-torn Ukraine is struggling with another, non-military crisis -- that of restructuring its debt.

The battle with the country's creditors – with claim and counter-claim emerging this week – is threatening to wreck a carefully crafted bailout plan constructed by the International Monetary Fund.

Among Ukraine's biggest creditors are five U.S. investment firms led by California-based Franklin Templeton, to whom about $23 billion is owed. These creditors risk a 'haircut' -- a potential reduction in the payback on their principal investment.

Then there is the debt to Russia, a $3 billion bond due for redemption in December this year.

Credit ratings agency Moody’s said earlier this year that such a haircut is almost inevitable:

“Although negotiations over the specific details of the restructuring are only now getting underway, Moody's believes that the likelihood of a distressed exchange, and hence a default on government debt taking place, is virtually 100 percent.

“The bonds' recovery value will be determined by the terms of the debt exchange and is currently being discussed with creditors.

“The terms could include a grace period on principal repayments during the term of the IMF program, a reduction in the existing bonds' current coupons, which now average 7.1%, and a haircut on the outstanding principal,” the agency said in March 24 statement.

Moody's downgraded the country’s credit to ‘Ca’ from ‘Caa3’ in March – the current rating is one that assumes a good chance of default. The outlook remains negative.

Ukraine's Finance Minister Natalie Jaresko is on the other side of the table. She is asking creditors to take a $15 billion haircut, so that the government may meet the requirements of the IMF bailout plan.

On April 27, the creditors agreed to a three-month respite for part of the debt, without which, Ukraine would have come close to default.

But there is still a wide gap between the two sides.

This week, creditors complained of lack of flexibility on the part of the Ukrainian finance ministry in a statement released on Tuesday.

Jaresko responded on Friday that “the finance ministry is concerned about the approach taken by the creditors’ committee representing the country’s external debt holders and their lack of willingness to engage in negotiations.”

But the ministry said that creditors have to agree on a sustainable debt level and debt service objectives which meet the targets of the IMF program.

“The ministry is committed to transparency, responsiveness and good faith negotiations and expects the creditors’ committee to do the same,” it said.

There is a deadline for these negotiations; the IMF will visit Kiev at the end of May to review conditions for the bailout plan. Deadlock on the debt could throw a monkey wrench into the entire bailout.

Then there is the separate issue of debt to Russia.

Moscow does not intend on participating in restructuring Ukraine's debt, Russian Deputy Finance Minister Sergei Storchak told reporters at a European Bank for Reconstruction and Development forum on Thursday.

Russian Finance Minister Anton Siluanov told Rossiya 1 television on Tuesday the country will seek arbitration if Ukraine does not repay the $3 billion of bonds it holds which will come due in December.

Russia bought $3 billion worth of Eurobonds from Ukraine in December 2013, with Kiev due to pay the debt off by December 2015.

More than 6,100 people have died in the conflict with pro-Russian separatist rebels in Ukraine, according to UN statistics. Fighting continues around the city of Mariupol, despite a ceasefire accord signed Feb. 12 by Russia, Ukraine, France and Germany.

“The conflict has ravaged the country’s economy,” Jaresko told the press on Friday.

“But the creditors do not seem to understand this.”

Since the Victory Day celebrations in Moscow on May 9th the western press has reverted to sound reporting, but why? In the Great Game of new world order backstabbing the smart question today is; “What’s next?”

You may not have noticed, but Russia has “Wowed” the world of international détente since the May 9th celebrations on Saturday. In what seems a capitulation by the Obama administration over the Ukraine chaos, news of John Kerry’s “make-up” wreath laying in Sochi has the world in a stir. Despite the positivity of this week’s events though, some are wondering; “what ticks are up Obama’s sleeve how?” Here’s a “not so fast” look at Putin’s latest policy win.

The early billing for the 70th anniversary of victory over Nazism from the mainstream was all about Vladimir Putin, but this week the world has warmed to the Russian people, and not just their president. Overnight the rhetoric over VDay70 has gone from the same old Putin bashing, to admiration and astonishment even from a mainstream media previously hell-bent on destroying anything Russian. Even the New York Times and CNN have rebooted to revert to news, rather than anti-Russia propaganda.  After over a year long Russophobic feeding frenzy, it seems corporate media may have been cured for now from the dread that has gripped the western world! If you need proof the plague is over, this New York Times headline should help dissipate any uncertainty:
A Diplomatic Victory, and Affirmation, for Putin

What is this? I know most of you must be pondering how victory in Cold War II could take place overnight, especially when the Nazi beast took half a decade to defeat in World War II. The article in question here even goes so far as to give up Crimea, once and for all, to a Vladimir Putin and his Russia indomitable after all. As NYTs Moscow bureau reporter David M. Herszenhor put it, Putin today is seen as:

   “..a national hero, unbowed, firmly in control, and having surrendered nothing, especially not Crimea, his most coveted prize.”


Remember I said; “Not so fast?”

Even despite a veritable landslide of amazingly factual news on Russia the last few days, there are still signs of “spoiled sports” too. This Wall Street Journal piece entitled; “Kerry Is So Very Nice to Putin”, it reeks of sardonic regret over the official visit to Sochi. So before we moderates jump up and down cheering, perhaps we’d better not under or over estimate the power of Washington think tank pondering. What I mean is, Obama and his advisers know they can’t get off that easy after so vehement a mud slinging war. Long and short, there’s got to be a scapegoat somewhere. But who?

With sanctions on Russia (and by proxy the EU) about to be lifted, and Crimea back safely under Russia’s protective wing, Barack Obama has got to lay the blame for conflict on somebody’s doorstep. We’ve dropped dime on NATO sponsoring kill lists in Ukraine. The Putin missile that western leaders said downed MH17 appears more like a cover-up than ever. Isolating Russia, attempting to destroy its currency and economy, spitting on World War II veterans like insignificant bit players in an American epic, all that has backfired now. All this is and far more is on Barack Obama’s head, he has to do the famous Potomac Two Step now. And the only likely suspect for causing war in Ukraine is…

Those pesky Germans. Who could have known that Berlin was capable of pulling the wool over an American president’s eyes? Why all those Nazis in Ukraine burning alive innocent civilians in Odessa, the symbols like the famous wolfsangel, Stefan Bandera fans, these are things Americans know nothing about. Why us good ol’ boys, not many of us even know where Ukraine is. I can just hear Obama addressing the American people now; “Well folks, it looks like there’s still Nazis over there in Germany. How could we have guessed?” Who in the west would have guessed Russia would be on an equal footing with America a year ago? I guess all those instances where Minister Lavrov asserted his country’s place were appropriate after all?

There has to be a wedge driven, you see? Not only does Washington need a scapegoat for the messes created worldwide today, but America’s ruling elite have their ongoing strategy game to consider. While you or I may like to consider Ukraine and the new Russia divide an acute happenstance, it’s wiser at this point to assume a bigger game afoot. Obama, the people who make presidents, they have contingencies in place out the wazoo, trust me. I spoke just yesterday with our European political analyst Holger Eekhof on the subject of Merkel-Obama dynamics. Eekhof had this to say about the German Chancellor’s role as a spoiler for Washington:

   “Mrs. Merkel has had the most difficult job in Europe for some time. Playing intermediary, appeasing Washington as best she can on the one hand, and averting catastrophe in the east on the other, she’s really been the only moderate in the Ukraine game. And now she is the most likely target for blame, as the Obama administration’s play on Putin crashes in flames.”

To see this move taking shape, we need read nor further than the same New York Times pages Putin’s victory announcement came from. The story; “Pressure Mounts on Merkel to Explain German Role in N.S.A. Espionage”, it’s the set piece for throwing Germany and Merkel to the EU wolves. Add some swastikas here and there, a right wing connection to the Chancellor’s cabinet maybe, and Voila! Obama and his London accomplices have more on Merkel than they did on Putin at any time in the game. Just the suggestion is enough with all of Europe screaming over economic woes. Quoting the NSA piece:

Tensions between Germany and the United States over intelligence cooperation intensified on Wednesday, amid a domestic controversy swirling around Chancellor Angela Merkel and her allies over the scope and oversight of Germany’s role in European spying.

Read on if you wonder if a break in US-German relations is at hand soon. As for strategy, imagine those kids games we used to play in the school yard back when. Betrayal for the mean little kid on the playground came about when plan A did not work. Plan B in this case may equal Germany marginalized and separated from Russia still. As for the logic of such a dastardly move, let’s face it there’s no love lost in between Germany and the rest of her EU partners of late. As Mr. Eekhof put it, “no matter how one looks at it, there are some brilliant strategists in Washington.” Signs Mrs. Merkel is wise to the potential for double dealing arrived this week too via Germany’s sale of to Israel. Merkel defending the sale of weapons to the Jewish state are probably aimed at defending hers and Germany’s stake in the world détente game, truth be told.

In conclusion, sitting here in Germany I see every day an apologetic public in never ending appeasement for the Holocaust. With two thirds of the world in Moscow celebrating destroying the Third Reich last weekend, and the other third waiting to throw the Germans under the world business bus, it’s small wonder two world wars started and ended here. Caught in the middle, in between great powers, this whole foreign relations mess today is a replay of the past. The names have changed, but the pressure to secure resources and profit remains the same.

And I though the day I could say “I told you so” to the New York Times would be fulfilling! While I was trying to tell the truth for Russia, it may turn out those Washington and London think tanks thought farther than I did. How about you?

kvs wrote:

Erk wrote:

sepheronx wrote:No, when you cant pay your bills, you get cut off. So effectively, Ukraine should have been cut off, but instead, Russia allowed contract to be overwritten and they now sell it at a discount. That is keeping kiev alive. Debt was supposed to be dealt with last year, and this year, Ukraine went past debt agreement on how much debt they can collect from IMF, which of course kiev broke and Russia once again did not call in the debt.

Russia have cut off gas to Ukraine several times, last year is was for something like 5months until they finally coughed up some money.

This is western media BS.   In both 2006 and 2009 it was the Yuschenko regime that cut off flow.   Gazprom had an independent Swiss
firm monitoring the meters and valves on the Russian side of the border.   But the western media chorus bleated "blackmail" over and
over.

As for recently, Ukraine was getting "reverse" flow of Gazprom's gas via Poland and Slovakia and it was Ukraine that decided to "live
without Russian gas".   So at no stage did Gazprom ever cut off Ukraine's supply.

Karl Haushofer wrote:

sepheronx wrote:

Flagship Victory wrote:

sepheronx wrote:Which is a very anti Russian thing to do. Clearly they are either idiots or traitors cause Ukraine is calling for death of Russians, yet Russia gladly helps Ukraine get by.

Pathetic. Putin hopefully gets voted out so someone with a spine moves in. Tells Kiev to screw itself, pay full price for gas, and provide open assistance to Lugansk and Donentsk.

What does Putin do when the putch regime massacres thousands of civilians right off Russia's border? Nothing. What does Putin say? Nothing. What did Iran do when the US invaded Iraq? Iran armed and trained Mahdi Army which eventually drove out the Americans.

Pretty much. screw Putin. he isnt a hitler, but he is an idiot.

People of Eastern Ukraine needs help and he is openly helping Kiev, who wants Putin and co dead.

Does this make any fricking sense?

A lot of Putin's actions (or lack of them) indeed seems appalling. I actually want to believe in him and I want him to do the right thing, but in the case of Donbass he has been to hesitant and too unwilling to act.

Karl Haushofer wrote:

Neutrality wrote:

sepheronx wrote:

BTW, Russia invaded Georgia even during economic hardship, won, pulled back. What has happened since? Georgia isnt anywhere near foaming at mouth enemy of Russia s it was during Suckasshevilli ruled.

In Georgia, there was an obvious casus belli which gave Russia legitimacy to invade and stop their batshit insane president. Ironic enough, it was Putin who had to force Medvedev's hand to act. Right now the resistance (Novorussian army) is holding well. There's no need for an invasion by the Russian army but the Russian government does provide assistance where it can.

Ukraine shelled Russian territory and killed Russian citizens during the earlier stages of the war. This would have been even a better "causus belli" for Russia than anything that happened in Georgia.

Flagship Victory wrote:

Karl Haushofer wrote:What you are saying is that Putin cares more about his own power and his own ego than he cares about Russia and Russians? If true, very disappointing.

Putin is the boss in Russia. He is the head of the Russian military. NO one else. There must be a chain of command. Insubordination is a big NO. Strelkov resigned and went to Crimea stirred up things then he went to Donbas stirred up things. Putin never planned for up rising in Crimea and Donbas. Strelkov is a vigilante, defying his superior officer, that is Putin. Yes, it is because of Strelkov that Crimea is a part of Russia today. But it is also because of Strelkov that Russia is under US and EU sanction. Defying superior officers is, in the past, punishable by death. Strelkov literally risked his life, not only in combat in Slavyansk and later in the DPR, also he could have been arrested by the FSB and executed for insubordination.

Karl Haushofer wrote:

Neutrality wrote:What the fuck is happening in Macedonia right now? Anyone who has been closely following the events? How the hell could a small scale incident lead to a full blown opposition protest?

The US is immensely powerful and capable. Never underestimate them. They can let the hell break loose with a snap of their fingers. In almost each part of the world.

Macedonia needs to be destabilized because of the Turkish Stream, so Macedonia will be destabilized. Nothing that Russia or anyone else can do about it.

This will also be a clear warning and an example for any country that wants to take part of Russia's pipeline projects. Make a deal with Russia and face the consequences.

Flagship Victory wrote:

sepheronx wrote:The good thing was, he wasn't arrested.  Hopefully he will run an alternative to Putin for a party.  He could work with current groups that can be considered as nationalistics or pro Russian groups (none of those crappy NGO's who support liberals).

True. Strelkov is not arrested and executed. Why? Because he resigned from FSB just before heading to Crimea as a vigilante. Once Strelkov resigned, he was no longer a military personnel but a civilian. Therefore Putin cannot arrest him and execute him for insubordination.

AbsoluteZero wrote:what critical developments can we expect in the near future? like for this year? collapse of the Ukrainian economy? resumption of rebel offensive? destabilization of countries involved in Russian gas pipelines? I still hope Putin has more surprises up his sleeve to counter American advances towards Russia